By all accounts, paid search spending rose in Q1 2012 as compared to the previous year, but by how much depends on the source, and the sector.

Covario, which serves mostly high-tech clients, says paid search in the Americas grew 15% in the first quarter, while Adobe’s Efficient Frontier, which serves clients in a variety of verticals, says it saw a 16% year-over-year increase in the U.S.. Meanwhile, the retail-heavy and U.S.-focused Rimm Kaufman Group (RKG) says search spend rose 30 percent as compared to the 2011 period.

All three companies recently released reports that give insight into how paid search did in the last quarter, and predict what spending might look like for the rest of the year to come.

Cost-per-click rates on Google continued to decline, according to Efficient Frontier. The company says Google CPCs fell by 5 percent year-over-year, and was down from the fourth quarter, as well. Still, by increasing clicks overall, the company has managed to hang onto its market share. It probably helps that Yahoo-Bing CPCs increased by 18% year-over-year, giving the Search Alliance less of an ROI advantage. According to Rimm Kaufman, Google CPCs fell 7% year-over-year in Q1, while CPCs on Yahoo-Bing rose 15% as compared to the year-ago period.

Image via Adobe's Efficient Frontier

Though Efficient Frontier said cost-per-click pricing was down in the automotive and finance sectors, the company found that CPCs dropped most precipitously (by 17%) in the retail sector.

Covario also noted a drop in CPCs, saying they declined 3% from Q4 ’11. The company’s analysts believe search engine algorithm changes are behind the decline and predict pricing will stabilize in the second half of the year.

The biggest trend noted by Efficient Frontier is paid search on smartphones and tablets. The company says spend on mobile devices in the U.S. represented 7.7% of all search spend in the first quarter, mostly driven by growth in spending on tablets. Tablet spend has grown from nearly zero in May of 2011 to 4.25% of all search ad spend by March of 2012. Spend on tablets is now greater than that on smartphones. The company predicts that overall mobile device spend will account for 15 to 20 percent of search spend by the end of this year.

Part of what’s driving the move to tablets especially is that conversions on tablets exceeds that of desktop devices, yet CPCs on tablets continue to be lower.

Image via Adobe's Efficient Frontier

Rimm Kaufman said it saw mobile traffic share at just under 14% at the end of the first quarter, which was nearly double 2011 levels. Tablets represented nearly 8% of paid search clicks and 57% of mobile clicks.

Image via Rimm Kaufman Group

Image by Rimm Kaufman Group

Google was the deliverer of much of that mobile traffic, and it continues to be the dominant player overall. The company commanded 78% market share in Q1, according to Covario. Spend on Google was up 1% from the typically-busy Q4 period, and up 23% over the year-ago period. The Yahoo-Bing Search Alliance showed 2% growth from the fourth quarter, but it’s still down 20% from the first quarter of 2011 and has 13% market share. Baidu, the leading player in China, grew 4% from last quarter and 142% year-over-year. The company rakes in 9% of global paid search spending.

Of the three companies, only Covario and Efficient Frontier made predictions about the rest of the year. Covario forecasts 18 to 22% annualized growth globally in 2012, while the Adobe unit only gives a U.S. number, saying growth will come in between 10 to 15 percent this year.

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About The Author

Pamela Parker is Executive Features Editor at Search Engine Land and Marketing Land. She’s a well-respected authority on digital marketing, having reported and written on the subject since 1998. She's a former managing editor of ClickZ, and worked on the business side helping independent publishers monetize their sites at Federated Media Publishing.

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http://www.julianthomasdmd.com/ Greenville Dentist

We’re increasing our advertising budget with Google’s CPC this year for our dental practice. It has worked well and we’re willing to spend more.

http://twitter.com/johnston_design Jarid P Johnston

I am wondering where is the best place to do ppc ads. I’ve
never receiver much results with any of my clients using them on the big three
search engines. Are there better alternatives? http://bit.ly/IhVAdo

http://www.facebook.com/profile.php?id=100003015735428 Nicholas Champ

I have heard that 90% percent of purchases made online are purely and solely through organic search methods therefore if this is the case how can anyone justify a CPC campaign?

Ozzie Perez

Optimizing for organic traffic and mixing it up with a little bit of cpc never hurts. Bidding for those darn competitive keywords is the conundrum.

Ozzie Perez

Adbrite prehaps?

http://www.facebook.com/johnadamalvino Serpholic Serphoic

I am surprised that it is the best place to do ppc, and it helps for increasing our advertising budget with Google’s.

Google Adwords Skeptics:
We’ve tried Facebook, and Bing/Yahoo. Hands down Adwords drives the traffic. Adwords has taken months to really get the hang of. It is important to follow all the steps their help files point out: https://support.google.com/adwords/?hl=en. Keywords matching focused ad groups. Multiple ads per ad group. All very important. The higher your Quality Score (add this to your columns) the cheaper your clicks are. Another thing I just learned is adding quotes around the key word phrases – MY KEYWORD will match for MY or KEYWORD while “MY KEYWORD” will match only for the phrase together MY KEYWORD. Can make a big difference. Last thing – use Google Analytics with Adwords – they have to be setup to work together. And, in Analytics you can see the keywords from your campaign that lead a visitor and what they actually searched for – great way to modify and improve your keywords and potentially add new negative keywords.

Hope you give Adwords another shot…

http://baltimorevelo.com/ seth

Anyone have an idea what market trends are driving down AdWords PPC?

http://www.webstatsart.com/ Webstats Art

I have experienced exactly the same thing. PPC ads do not bring any amount of decent traffic. I bet all those tens of thousands of dollars I have spent are being clicked by kids who can’t even read.

http://www.facebook.com/profile.php?id=507536131 Michael Shostack

You need to educate yourself on attribution modeling and path to conversion reporting. Just because an organic click drove the final click fro the conversion doesn’t mean that it was completely unassisted by any of your paid clicks.

Check out the the multi-channel reports in Google Analytics, they will give you a sense of the various touch-points that your customers go through and how many it takes on average for a conversion. It is enlightening to say the least, despite the fact that it opens a whole new can of worms with management challenges.

http://twitter.com/DontTalkTooLoud Alex Zobrack

I believe you were referring to the drop in CPC. It is because of the increase in mobile clicks. These clicks are cheaper than desktop clicks and are driving down the overall CPC. It is deceiving for the article to say that CPCs are down when it is just an increase in mobile(cheaper) clicks.